The car industry is often used as a barometer for economic prosperity, but how
much does it contributes and why is it so crucial?

As Britain attempts to stumble its way out of recession, the car industry has consistently shown green shoots of recovery in an otherwise rather arid business landscape. Jaguar Land Rover recently revealed it had invested £370 million in creating the world’s largest aluminium bodyshop in Solihull, West Midlands. And Honda has committed £267 million and created 500 new jobs at its plant in Swindon, Wiltshire. But these figures, although impressive, don’t actually do the UK’s car industry justice.

While creating just one job is welcome, the numbers reported are merely a drop in the ocean of what the British motor industry as a whole contributes to the economy. Of the 29.48 million people the Government says are employed in the UK, according to the Society of Motor Manufacturers and Traders (SMMT) 757,500 of them are involved in designing, engineering, manufacturing and mending motors as well as making components for them.

That number is growing, too. Paul Everitt, chief executive of the SMMT, said: “In the last two years alone £6 billion has been committed to the domestic automotive sector. Combined with on-going government support and collaboration along with Eurozone stability, new car production could break all-time records by 2015.”

Producing cars is frequently cited as being vital to UK manufacturing. It brings £10 billion to the economy and accounts for 7.2 per cent of British manufacturing as a whole. This is largely thanks to the seven volume car manufacturers, eight major sports car and premium brands and more than 100 specialist manufacturers. There are also seven commercial vehicle and 10 bus and coach makers, and eight Formula One teams based here.

Everitt added: “The UK automotive industry is leading economic recovery with increased manufacturing output, growing export volumes and new jobs being created on the back of major international investment in the sector. Our engineering expertise, workforce flexibility and renowned motoring heritage, combined with top level collaboration between industry and government, makes the UK an important location for the global automotive industry and a cornerstone of the country’s economy.”

Making cars isn’t actually the largest employer. What cars need are components, thousands of them. And it’s here that Britain excels. Take engines. According to the SMMT, last year this country made 2,504,054 of the things. Ford produced 987,078 at Dagenham in Essex alone. The firm’s Bridgend plant in south Wales pumped out a further 714,709, while BMW made 433,689 at Hams Hall, West Midlands.

Drill into that and each engine, and for that matter car, will have parts that are made and sourced from outside the car company. Government figures suggest there are 2,350 such component-supplying firms in the UK ranging from global players such as Delphi to small engineering firms, employing about 82,000 people and adding about £4bn in value to the UK economy. Their net worth as exports is about £5bn, with 75 per cent going to mainland Europe.

The importance of exports can’t be overestimated. The motor industry accounts for 12 per cent of Britain’s sales abroad with exports worth £30bn. Of the 1,343,810 cars made in the UK (a figure that was up by a shade under six per cent on the year before), a record 83.7 per cent found homes outside the UK last year.

But of the 750,000 people employed by the car industry, only 139,000 are accounted for by manufacturing. There are another 580,000 who work in 66,000 businesses across the country selling and servicing cars and adding £22bn to the UK economy. This is thanks to the UK having Britain’s third largest automotive market, accounting for the equivalent of 14.3 per cent of European vehicle registrations.

In addition to cars we have a thriving commercial vehicle industry. Last year Britain produced 121,312 vans, trucks and buses of which 57.7 per cent were exported.

As well as manufacturing vehicles and their components for sale, automotive design and engineering is booming in Britain. Nissan, for example, has 600 jobs at its research and development facility at Cranfield in Bedfordshire. And there are 50 jobs at its design centre in Paddington, central London. In total, automotive design engineering in the UK generates work for 7,500 people, and turns over £650m with about 65 per cent of its product exported.

As you might expect, motorsport makes a massive contribution. The Motorsport Industry Association (MIA) says there are approximately 4,500 companies involved in the UK motorsport and performance engineering industry. Our world-beating F1 business takes all the headlines with teams such as world champions Red Bull and German giant Mercedes based here, but as a whole motorsport yields 38,500 jobs. The industry also boasts an annual turnover of £6bn, of which £3.6bn is from exports. Of the jobs, the MIA estimates 25,000 are qualified engineers and its research and development spend amounts to 30 per cent of turnover, dwarfing even the IT and pharmaceutical industries.

It makes Britain the acknowledged world leader in motorsports. But perhaps the two most outstanding figures are that the UK motor industry as a whole turns over £55bn and two thirds of the money made from transport manufacturing in the UK is down to automotive alone, way ahead of air, rail or marine industries.